Carrefour to open more stores in Asia

GROWING MARKET The company expects that half of the new stores it opens this year will be in Asia, which currently contributes 7 percent of the retailer's revenues

BLOOMBERG

Carrefour SA, the world's biggest retailer after Wal-Mart Stores Inc, plans to increase revenue from Asia by opening more stores in the region as sales in its home market France slow.

"Asia is our real engine of growth," Carrefour Chief Executive Jose Luis Duran, 40, said yesterday in Bangkok, where he headed a French delegation aimed at boosting trade with Thailand. "The only thing I can anticipate is probably half of the new stores to be opened in 2005 and 2006 are going to come in Asia," he said.

Asia makes up 7 percent of revenue at Paris-based Carrefour, which has about 10,000 stores on three continents. Second-half profit fell 23 percent to 853 million euros (US$1.14 billion), partly because of writedowns in Japan, where Carrefour is selling its stores after failing to make them profitable.

"We are not going to exit any other market in Asia," Duran said. "We are No. 1 in Taiwan, in China, in Indonesia."

Soaring economic growth, particularly in China, is boosting incomes and allowing people to eat better and buy pricier imported goods. China's economic growth reached 9.5 percent last year. Per capita disposable incomes in urban areas, home to a third of the nation's 1.3 billion people, rose 7.7 percent in real terms to 9,422 yuan (US$1,138) last year.

"In China, we have 59 hypermarkets and around 200 hard discount stores," Duran said. "We are pretty happy with how we are developing two of our main formats, the hypermarkets and the hard discount stores." Carrefour, which opened 15 hypermarkets last year in China, plans to open a similar number this year there, adding about 200,000m2 (2.2 million square feet) of sales area, Duran said.

Overall retail sales in China sales climbed 13.6 percent in the first two months of this year as rising incomes spurred spending in the world's most-populous nation.

Rising spending is prompting companies including LVMH Moet Hennessy Louis Vuitton SA and Wumart Stores Inc to expand in China, helping sustain economic growth amid a government clampdown on investment in industries including real estate, autos and steel. Premier Wen Jiabao (溫家寶) said on March 5 that the government will lower taxes to help boost local demand this year.

"We are opening around three to four new hypermarkets a year," Duran said. "The target is to reinforce our investments in Thailand. If we could open more, we are going to open all what can be approved by the government." Tesco has 49 hypermarkets, each spanning as much as 12,000m2, 16 smaller supermarkets and 50 convenience stores.

Big C plans to spend 3 billion baht (US$77 million) this year to add four stores for a total of 44, Chief Financial Officer Rumpa Kumhomruen said on March 9.

In France, Carrefour said it will concentrate on reviving stores in that country and in Europe after price cuts failed to halt a drop in market share to the benefit of competitors such as E. Leclerc.

Carrefour, like German retailer KarstadtQuelle AG, has suffered as consumer spending in Europe has stagnated, hurt by an unemployment rate of 8.8 percent. Retail sales in the dozen nations sharing the euro fell by the most last year, the Bloomberg purchasing managers index showed.

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